TORBELA VS. SPS.

ROSARIO
G.R. No. 140528
2011

December 7,

MARIA TORBELA, represented by her

heirs, namely: EULOGIO TOSINO, husband
and children: CLARO, MAXIMINO,
CORNELIO, OLIVIA and CALIXTA, all
surnamed TOSINO, APOLONIA TOSINO
VDA. DE RAMIREZ and JULITA TOSINO
DEAN; PEDRO TORBELA, represented by
his heirs, namely: JOSE and DIONISIO,
both surnamed TORBELA; EUFROSINA
TORBELA ROSARIO, represented by her
heirs, namely: ESTEBAN T. ROSARIO,
MANUEL T. ROSARIO, ROMULO T. ROSARIO
and ANDREA ROSARIO-HADUCA; LEONILA
TORBELA TAMIN; FERNANDO TORBELA,
represented by his heirs, namely: SERGIO
T. TORBELA, EUTROPIA T. VELASCO, PILAR
T. ZULUETA, CANDIDO T. TORBELA,
FLORENTINA T. TORBELA and PANTALEON
T. TORBELA; DOLORES TORBELA TABLADA;
LEONORA TORBELA AGUSTIN, represented
by her heirs, namely: PATRICIO,
SEGUNDO, CONSUELO and FELIX, all
surnamed AGUSTIN; and SEVERINA
TORBELA ILDEFONSO, Petitioners,
vs.
SPOUSES ANDRES T. ROSARIO and LENA
DUQUE-ROSARIO and BANCO FILIPINO
SAVINGS AND MORTGAGE
BANK, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 140553
LENA DUQUE-ROSARIO, Petitioner,
vs.
BANCO FILIPINO SAVINGS AND MORTGAGE
BANK, Respondent.
Presently before the Court are two consolidated
Petitions for Review on Certiorari under Rule 45
of the Rules of Court, both assailing the
Decision1 dated
June
29,
1999
and
Resolution2 dated October 22, 1999 of the
Court of Appeals in CA-G.R. CV No. 39770.
The petitioners in G.R. No. 140528 are siblings.
Dr. Rosario is the son of Eufrosina Torbela
Rosario and the nephew of the other Torbela
siblings.

The controversy began with a parcel of land,

with an area of 374 square meters, located in
Urdaneta City, Pangasinan (Lot No. 356-A). It
was originally part of a larger parcel of land,
known as Lot No. 356 in the name of Valeriano
Semilla
(Valeriano).
Under
unexplained
circumstances, Valeriano gave Lot No. 356-A to
his sister Marta Semilla, married to Eugenio
Torbela (spouses Torbela). Upon the deaths of
the spouses Torbela, Lot No. 356-A was
adjudicated in equal shares among their
children, the Torbela siblings, by virtue of a
Deed of Extrajudicial Partition.
Torbela siblings executed a Deed of Absolute
Quitclaim over Lot No. 356-A and conveyed it
in favor of Dr. Rosario. Hence, TCT No.
52751 was issued in Dr. Rosarios name
covering the said property.
Another Deed of Absolute Quitclaim was
subsequently executed this time by Dr. Rosario,
acknowledging that he only borrowed Lot No.
356-A from the Torbela siblings and was
already returning the same to the latter
for P1.00.
The
aforequoted
Deed
was
notarized, but was not immediately annotated
on TCT No. 52751.
Following the issuance of TCT No. 52751, Dr.
Rosario obtained a loan from the DBP on
February 21, 1965 in the sum of P70,200.00,
secured by a mortgage constituted on Lot No.
356-A. Dr. Rosario used the proceeds of the
loan for the construction of improvements on
said lot.
Cornelio T. Tosino (Cornelio) executed an
Affidavit of Adverse Claim, on behalf of the
Torbela siblings, which deposed: it is the
desire of the parties, my aforestated kins, to
register ownership over the above-described
property or to perfect their title over the same
but their Deed could not be registered because
the registered owner now, Dr. ROSARIO
mortgaged the property with the DBP, and for
which reason, the Title is still held by the said
bank; The affidavit requests the Register of
Deeds of Pangasinan to annotate their adverse
claim at the back of TCT No. 52751, and the
Deed of Absolute Quitclaim by Dr. Rosario.
Subsequently, these deeds were allowed to be
annotated as Entry Nos. 274471 and 274472
respectively.
The construction of a four-storey building on
Lot No. 356-A was eventually completed. The

building was initially used as a hospital, but

was later converted to a commercial building.
Part of the building was leased to PT&T; and
the rest to Mrs. Andrea Rosario-Haduca, Dr.
Rosarios sister, who operated the Rose Inn
Hotel and Restaurant.
Dr. Rosario was able to fully pay his loan from
DBP and the mortagage was subsequently
cancelled. Dr. Rosario acquired another loan
PNB. The loan was secured by mortgages
constituted on three properties which included
Lot No. 356-A, covered by TCT No. 52751. The
amended loan agreement and mortgage on Lot
No. 356-A was annotated on TCT No. 52751
under Entry No. 520099
Five days later, another annotation, Entry No.
520469, was made on TCT No. 52751,
canceling the adverse claim on Lot No. 356-A
under Entry Nos. 274471-274472, on the basis
of the Cancellation and Discharge of Mortgage.
Dr. Rosario and his wife, Duque-Rosario
(spouses Rosario), acquired a third loan in the
amount of P1.2 and later reduced to
P830,064.00 from Banco Filipino. To secure said
loan, the spouses Rosario again constituted
mortgages which included Lot No. 356-A and
was annotated on TCT No. 52751.
Because Banco Filipino paid the balance of Dr.
Rosarios loan from PNB, the mortgage on Lot
No. 356-A in favor of PNB was cancelled on TCT
No. 52751.
Torbela siblings filed before the RTC of
Urdaneta, Pangasinan, a Complaint CIVIL
CASE U-4359 was filed
for recovery of
ownership and possession of Lot No. 356-A,
plus damages, against the spouses Rosario.
The spouses Rosario afterwards failed to pay
their loan from Banco Filipino. Banco Filipino
extrajudicially
foreclosed
the
mortgages
including Lot No. 356-A, and was the lone
bidder for the foreclosed properties. Torbela
siblings impleaded Banco Filipino as additional
defendant in their complaint and prayed that
the spouses Rosario be ordered to redeem Lot
No. 356-A from Banco Filipino.
The spouses Rosario instituted before the RTC a
case for annulment of extrajudicial foreclosure
against Banco Filipino, Sheriff and Register of
Deeds.

Meanwhile, the Torbela siblings tried to redeem

Lot No. 356-A from Banco Filipino, but their
efforts were unsuccessful. Subsequently, new
certificates of title were issued in the name of
Banco Filipino including Lot No. 356-A.
The Torbela siblings thereafter filed before the
RTC on August 29, 1988 a Complaint for
annulment of the Certificate of Final Sale dated
May 24, 1988, judicial cancelation of TCT No.
165813, and damages, against Banco Filipino,
the Ex Officio Provincial Sheriff, and the
Register of Deeds of Pangasinan, which was
docketed as Civil Case No. U-4733.
The RTC jointly heard the civil cases.
It
declared that Dr. Rosario only holds Lot. No.
356-A in trust for the Torbela siblings.
ISSUE 1: WON There was an express trust
between the Torbela siblings and Dr. Rosario.
HELD: YES.
Torbela siblings explained that they only
executed the Deed as an accommodation so
that Dr. Rosario could have Lot No. 356-A
registered in his name and use said property to
secure a loan from DBP, the proceeds of which
would be used for building a hospital on Lot No.
356-A a claim supported by testimonial and
documentary evidence.
Dr. Rosario executed his own Deed of Absolute
Quitclaim, in which he expressly acknowledged
that he "only borrowed" Lot No. 356-A and was
transferring and conveying the same back to
the Torbela siblings for the consideration
of P1.00.
Dr. Rosario testified that he obtained Lot No.
356-A
after
paying
the
Torbela
siblings P25,000.00, pursuant to a verbal
agreement with the latter. The Court though
observes that Dr. Rosarios testimony on the
execution and existence of the verbal
agreement with the Torbela siblings lacks
significant details (such as the names of the
parties present, dates, places, etc.) and is not
corroborated by independent evidence.
In addition, Dr. Rosario acknowledged the
execution of the two Deeds of Absolute
Quitclaim even affirming his own signature on
the latter Deed. The Parol Evidence Rule
provides that when the terms of the agreement
have been reduced into writing, it is considered

as containing all the terms agreed upon and

there can be, between the parties and their
successors in interest, no evidence of such
terms other than the contents of the written
agreement.
Even if the Court considers Dr. Rosarios
testimony on his alleged verbal agreement
with the Torbela siblings, the Court finds the
same unsatisfactory. Dr. Rosario averred that
the two Deeds were executed only because he
was "planning to secure loan from DBP and
PNB
and
the
bank
needed
absolute
quitclaim[.]"58 While Dr. Rosarios explanation
makes sense for the first Deed of Absolute
Quitclaim executed by the Torbela siblings
(which transferred Lot No. 356-A to Dr.
Rosario), the same could not be said for the
second Deed of Absolute Quitclaim executed
by Dr. Rosario. In fact, Dr. Rosarios Deed of
Absolute Quitclaim (in which he admitted that
he only borrowed Lot No. 356-A and was
transferring the same to the Torbela siblings
for P1.00.00) would actually work against the
approval of Dr. Rosarios loan by the banks.
Since Dr. Rosarios Deed of Absolute Quitclaim
is a declaration against his self-interest, it must
be taken as favoring the truthfulness of the
contents of said Deed.
It can also be said that Dr. Rosario is estopped
from claiming or asserting ownership over Lot
No. 356-A based on his Deed of Absolute
Quitclaim. Dr. Rosario's admission in the said
Deed that he merely borrowed Lot No. 356-A is
deemed conclusive upon him.
Trust is the right to the beneficial enjoyment of
property, the legal title to which is vested in
another. It is a fiduciary relationship that
obliges the trustee to deal with the property for
the benefit of the beneficiary. Trust relations
between parties may either be express or
implied. An express trust is created by the
intention of the trustor or of the parties, while
an implied trust comes into being by operation
of law.
The Court recognized that a trust may have a
constructive or implied nature in the beginning,
but the registered owners subsequent express
acknowledgement in a public document of a
previous sale of the property to another party,
had
the
effect
of
imparting
to
the
aforementioned trust the nature of an express
trust. The same situation exists in this case.
When Dr. Rosario was able to register Lot No.
356-A in his name under TCT No. 52751, an

implied trust was initially established between

him and the Torbela siblings under Article 1451
of the Civil Code.
Dr. Rosarios execution of the Deed of Absolute
Quitclaim, containing his express admission
that he only borrowed Lot No. 356-A from the
Torbela siblings, eventually transformed the
nature of the trust to an express one. The
express trust continued despite Dr. Rosario
stating in his Deed of Absolute Quitclaim that
he was already returning Lot No. 356-A to the
Torbela siblings as Lot No. 356-A remained
registered in Dr. Rosarios name under TCT No.
52751 and Dr. Rosario kept possession of said
property, together with the improvements
thereon.
ISSUE 2: WON the right of the Torbela siblings
to recover Lot No. 356-A has prescribed.
HELD: NO.
"While there are some decisions which hold
that an action upon a trust is imprescriptible,
without distinguishing between express and
implied trusts, the better rule, as laid down by
this Court in other decisions, is that
prescription does supervene where the trust is
merely an implied one.
Under Section 40 of the old Code of Civil
Procedure, all actions for recovery of real
property prescribed in 10 years, excepting only
actions based on continuing or subsisting
trusts that were considered by section 38 as
imprescriptible. As held in the case of Diaz v.
Gorricho, L-11229, March 29, 1958, however,
the
continuing
or
subsisting
trusts
contemplated in section 38 of the Code of Civil
Procedure
referred
only
to
express
unrepudiated trusts, and did not include
constructive trusts (that are imposed by law)
where no fiduciary relation exists and the
trustee does not recognize the trust at all."
This principle was amplified in Escay v. Court of
Appeals this way: "Express trusts prescribe 10
years from the repudiation of the trust.
To apply the 10-year prescriptive period, which
would bar a beneficiarys action to recover in
an express trust, the repudiation of the trust
must be proven by clear and convincing
evidence and made known to the beneficiary.
In an express trust, the delay of the beneficiary
is directly attributable to the trustee who

undertakes to hold the property for the former,

or who is linked to the beneficiary by
confidential or fiduciary relations. The trustee's
possession is, therefore, not adverse to the
beneficiary, until and unless the latter is made
aware that the trust has been repudiated.
Dr. Rosario argues that he is deemed to have
repudiated the trust on December 16, 1964,
when he registered Lot No. 356-A in his name
under TCT No. 52751, so when on February 13,
1986, the Torbela siblings instituted before the
RTC Civil Case No. U-4359, for the recovery of
ownership and possession of Lot No. 356-A
from the spouses Rosario, over 21 years had
passed. Civil Case No. U-4359 was already
barred by prescription, as well as laches.
It is clear that under the foregoing
jurisprudence, the registration of Lot No. 356-A
by Dr. Rosario in his name under TCT No.
52751 is not the repudiation that would have
caused the 10-year prescriptive period for the
enforcement of an express trust to run.
The CA held that Dr. Rosario repudiated the
express trust when he acquired another loan
from PNB and constituted a second mortgage
on Lot No. 356-A sometime in 1979, which,
unlike the first mortgage to DBP in 1965, was
without the knowledge and/or consent of the
Torbela siblings.
The Court only concurs in part with the CA on
this matter.
For repudiation of an express trust to be
effective, the unequivocal act of repudiation
had to be made known to the Torbela siblings
as the cestuis que trust and must be proven by
clear and conclusive evidence. A scrutiny of
TCT No. 52751 reveals the following inscription:
Entry No. 520099
Amendment of the mortgage in favor of PNB
inscribed under Entry No. 490658 in the sense
that the consideration thereof has been
increased to PHILIPPINE PESOS Four Hundred
Fifty Thousand Pesos only (P450,000.00) and to
secure any and all negotiations with PNB,
whether contracted before, during or after the
date of this instrument, acknowledged before
Notary Public of Pangasinan Alejo M. Dato as
Doc. No. 198, Page No. 41, Book No. 11, Series
of 1985.

Date of Instrument March 5, 1981

Date of Inscription March 6, 1981
Although according to Entry No. 520099, the
original loan and mortgage agreement of Lot
No. 356-A between Dr. Rosario and PNB was
previously inscribed as Entry No. 490658, Entry
No. 490658 does not actually appear on TCT
No. 52751 and, thus, it cannot be used as the
reckoning date for the start of the prescriptive
period.
The Torbela siblings can only be charged with
knowledge of the mortgage of Lot No. 356-A to
PNB on March 6, 1981 when the amended loan
and mortgage agreement was registered on
TCT No. 52751 as Entry No. 520099. Entry No.
520099 is constructive notice to the whole
world that Lot No. 356-A was mortgaged by Dr.
Rosario to PNB as security for a loan. Hence,
Dr. Rosario is deemed to have effectively
repudiated the express trust between him and
the Torbela siblings on March 6, 1981, on which
day,
the
prescriptive
period
for
the
enforcement of the express trust by the Torbela
siblings began to run.
From March 6, 1981, when the amended loan
and mortgage agreement was registered on
TCT No. 52751, to February 13, 1986, when the
Torbela siblings instituted before the RTC Civil
Case No. U-4359 against the spouses Rosario,
only about five years had passed. The Torbela
siblings were able to institute Civil Case No. U4359 well before the lapse of the 10-year
prescriptive period for the enforcement of their
express trust with Dr. Rosario.
Civil Case No. U-4359 is likewise not barred by
laches. Laches means the failure or neglect, for
an unreasonable and unexplained length of
time, to do that which by exercising due
diligence could or should have been done
earlier. It is negligence or omission to assert a
right within a reasonable time, warranting a
presumption that the party entitled to assert it
either has abandoned it or declined to assert it.
As the Court explained in the preceding
paragraphs, the Torbela siblings instituted Civil
Case No. U-4359 five years after Dr. Rosarios
repudiation of the express trust, still within the
10-year prescriptive period for enforcement of
such trusts. This does not constitute an
unreasonable delay in asserting one's right. A
delay within the prescriptive period is
sanctioned by law and is not considered to be a

delay that would bar relief. Laches apply only

in the absence of a statutory prescriptive
period.75
note: The Court finds that Banco Filipino
is not a mortgagee in good faith. Entry Nos.
274471-274472 were not validly cancelled, and
the improper cancellation should have been
apparent to Banco Filipino and aroused
suspicion in said bank of some defect in Dr.
Rosarios title.

RULING: Banco Filipino is ORDERED to

reconvey Lot No. 356-A to the Torbela siblings;
The Register of Deeds of Pangasinan is
ORDERED to cancel TCT No. 165813 in the
name of Banco Filipino and to issue a new
certificate of title in the name of the Torbela
siblings for Lot No. 356-A;